Keeping Costs Down In The Era Of Free Returns

Modern eCommerce retailers are increasingly being stress-tested.

With customers demanding more free stuff, from free shipping to free returns, and wanting a more transparent shopping experience, the time is coming when wide swaths of the eCommerce industry may crack and fall down. Because those online retailers that can follow a certain giant Internet retailer’s every move, you can be certain that things will only go from bad to worse for them until they find a way to keep their costs down, including the cost of transporting their goods back and forth from consumers.

Tempering Expectations

Leaders in the business community have explained that “keeping up with the Joneses’” as the main reason that online retailers have gotten in so deep. There’s some merit to this argument, though the Jones family this group is envying happens to have an incredible amount of capital backing it.

If your business is struggling to keep a hold on your costs while ensuring super customer approval, give these tricks for keeping your costs down a try:

  • Enact minimums and maximums. Some people refer to this as “putting rails” on the thing in question, but regardless of what you call it, it’s a good strategy. For example, tell customers there’s no free shipping below a certain threshold and same for returns. You’re not taking back a $2 top and paying for the shipping. Figure out where your break-even point is and strictly enforce it.
  • Try membership fees. Free shipping and returns? Sure. But it’s going to cost you. Increasingly, companies like GrubHub and InstaCart are creating loyalty programs that give the member a break on fees in exchange for a flat monthly charge. You can do this, too. Just make sure your numbers are on point or it could cost you a lot more than it saves.
  • Invest in your catalog. Online or off, people want to know that what they’re getting is what they expect. Too often retailers skimp on things like product descriptions and images that give the shopper a complete picture.
    All that savings in production ends up costing a fortune in returns and the manpower to process them. Instead of getting the cheapest writers and photographers ever, invest more in your catalog and you won’t have to worry about free returns eating up your overhead.

Keeping costs down across the board should always be your goal, but with a view to the long distant future. It’s not enough to say “no more free returns” or “shipping isn’t included,” you have to figure out what’s causing all of these returns and then address it as well as you can.

Whether that means better product pages on your end or more buy-in from your customers in the form of membership programs, there’s a serious danger in eCommerce today. Don’t try to be a company that you’re not, because that’s doomed to fail. Instead, focus on your own customers and what they want and need from your relationship to help keep your costs down.

2019-03-12T21:56:23+00:00March 13th, 2019|Categories: Returns Management, Reverse Logistics, Supply Chain|0 Comments

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